Community Health Systems reported a $51 million net loss on revenue of $3.1 billion in the first quarter of 2023, driven by “challenging dynamics” like lower patient acuity and continued heightened expenses, according to the for-profit hospital operator’s financial results released Monday.
Executives on a Tuesday earnings call said that CHS continued to grapple with labor expenses and high supply costs. Non-labor costs also hampered the Franklin, Tennessee-based operator, including a year-over-year increase in medical specialist fees and professional liability expenses.
Labor expenses rose for the operator sequentially, but declined year over year. Salary and benefit expenses combined with contract labor costs increased sequentially by about $13 million — driven by an almost 6% increase in average hourly wages — and decreased about $65 million year over year, CFO Kevin Hammons said on the call.
The operator said it expects contract labor expenses to go down, with CEO Tim Hingtgen adding CHS had “great success” in hiring nurses during the first quarter.
Lower patient acuity resulted in an average length of stay of 4.6 days, down from 5.1 days compared to the first quarter of 2022 but flat compared to the fourth quarter.
CHS reported a profit of $414 million in the prior quarter, driven by a $119 million boost in income from an October sale of a majority stake in CoreTrust Holdings, and a $180 million lift on its balance sheet from an early debt extinguishment.
CHS’ net loss in the first quarter was partially offset by an increase in patient volumes, which Hingtgen characterized as a “return in core demand for healthcare services.” The operator reported a 4.8% year-over-year increase in same-store admissions.
For-profit hospitals have grappled with labor expenses in the first quarter this year, as pricey contract labor fees linger following pandemic highs. Tenet Healthcare’s CFO announced during its earnings results that the operator did not expect contract labor costs to return to pre-pandemic levels this year, though operators like HCA Healthcare have reported progress on labor expenses.